Okay. Uh, got 12:02. I’d like to get started here. Looks like, uh, we have a few more few more attendees joining in. So, hopefully we’ll give you a chance here to connect to the audio. We see a couple more coming in, but yeah, we’ll get started today. Appreciate you joining me. My name is Tom Davia, one of the uh, financial consultants here at Alliant, our department or division of the credit union. It’s called Alliant Retirement and Investment Services. And today we’re going to be talking about social security, right? It’s called uh looking at the big picture. We’ll talk about social security from the uh the comfort of your own home. I do a uh bi-weekly schedule on these webinars for the credit union. So today’s social security coming up uh next I think I have my old schedule here. So this one does not look correct. Uh but this is our list here. So this is our webinar schedule. And uh I’m also the co-host of the podcast and uh we have a blog on the website as well just for some more financial resources. But uh what you could do since I had the wrong webinar information, but uh if you go to aerys.allcreditun.com/events,
that’s going to be our webinar schedule and also alliantcreditun.com/mpodcast
for the podcast episodes. don’t expect you to memorize or write down that long website address. But basically, if you go to the credit union website, if you click in the upper right hand corner investments, it’s going to take you to our homepage here on the investment side. And right at the top, there’ll be a button to the uh webinars, podcast, and blog there as well. So I always say if anybody uh wants to join us, if you have friends and family, anybody interested in these topics, they missed today on social security, happy to talk with them on a onetoone basis. Some upcoming events as well, please uh just let us know, have them register the events and we’d like to have as many people join us as possible. What we do is uh put out these uh uh presentations just to share some financial information with you, but also let you know that we’re here, that we exist, that your credit union does offer a fullervice financial planning arm or division. I always say we’re the best kept secret at the credit union. We do full financial planning for you here as well. So this is an output of a uh a kind of hypothetical financial plan. But basically when we put these plans together, we want to sit down with you, have a discussion about your situation, your goals, put together that comprehensive plan, talk to you about today’s topic, social security, what may be the right decisions for you on that. also about ways of reducing taxes or some tax efficient investing or income distribution strategies for you that are tax efficient. Talk about uh ways to fight inflation. Over the last couple years, it’s been high. We want to make sure your portfolios are resilient for that as well. Generating more income from your investments or your nest egg. Looking to the right accounts tax-wise to pull income from your investments as well. dealing with volatilities, health care costs. There’s a lot that we could talk about within a financial plan. So, just want to make sure uh you’re aware that we’re here. We’re able to help you with this. What we’re talking about today in these plans, I’m going to reference the back to this a couple times when talking about social security, but this is available to you as a member of the credit union. It’s something that we do on a nocost service to get this planning together just to see that everything is in line and make sure that you’re reaching your financial goals. We can also help on the investments implementing the plan as well and help you uh implement some of the investments to uh to work through the financial plan. So, with that said, uh I’m going to get into social security here. We’re going to reference back to some of our investments and some of our investment planning. I just had one last s slide about that. Only 36% of Americans have a written financial plan. So, we’re really uh making a connection today, letting you know these resources are available that you could work on your plan and kind of change some of those numbers. So, we’re on social security. This is the agenda for today. We’re going to talk about uh then and now. So, we’re going to talk about the history of Social Security, how it started, how we got to this point, where we’re at in the the whole system. Uh, we’re going to talk about benefits, calculating your benefits. We’re going to talk about when to file, how to file. We’ll give you some filing strategies, talk about survivor benefits, spousal benefits, of course, taxes. We always have to talk about taxes, and then we’ll wrap it up with a couple ideas at the back back end of the presentation as well. Um, just as you did as I go through this information, if you have any questions, right, if something comes up in one of the slides, think about maybe one of your situations you’d like to have a question answered. If you use the Q&A feature, there’s a Q&A box within the Zoom meeting. There’s also a chat feature. Just go ahead while I’m talking, put your uh questions in there, and then at the end of the presentation, I’ll circle back and get those questions for you as well. get those questions answered. So, what we’re going to do first is we’re going to talk about Social Security then and now. Then meaning when it started. Social Security actually started in 1935. It’s the ironically the same year that uh Alliant Credit Union started, 1935. So back then it was a great system, right? It paid retired workers and I think workers are the key to that phrase. So just people who paid into the system retired got funds out and more people were paying into the system than we’re drawing out of the system. So more people paying in and life expectancy was age 63. Full retirement age back then when the program started was 65. So life expectancy was 63. Social Security, full retirement started at 65. So if you’re around long enough to collect the benefits, you don’t really collect them too much longer, which kind of created a surplus over time. More people paying in, people not receiving the payments for as long. We build up the Social Security trust funds. So there’s extra funds above what’s coming in from the workers. So now we change it to today. Today it’s a little opposite of what it was when it started. So life expectancy, right? Life expectancy has gone from age 63 when the program started. Life expectancy is now in the mid80s. So it’s much longer, right? Statistically, if you reach age 65, there’s a good chance you’re living another 20 years. So, we’re paying out more money than we were before, more benefits because life expectancy is longer. Now, before I said we were paying the retired workers, but over the years this has changed. So, it’s not just the retired workers. Now, it’s changed. It’s actually called the old age OASDI. Old age and survivors disability trust fund is the official name for social security. But instead of just paying a retired worker, now we have spousal benefits, we have benefits for children, disabled benefits, divorce benefits, all these sorts of things. So when you put it all together, there’s more money going out of the system today than there was in the past. So what we’re doing is we’re tapping into those excess surplus trust funds that were built up over all those years. So now if we look at it right over 173 175 million workers are covered more than 65 million Americans are receiving benefits and there are currently 2.8 workers for each beneficiary. By 2037 that number goes down. Less people in the workforce. There’s going to be about 2.1 workers for each person each beneficiary receiving payments. So you probably heard this in the news quite a bit. uh under current assumptions, if nothing changes with social security, when we get to the year, this is debated back and forth, but when we get to the year 2034, 2035, under all current assumptions, the program will only be able to pay out 80% of benefits. So whatever is promised on the statements uh if we don’t change anything there will be a reduction in social security be a 20% reduction. It cannot completely go away. It can’t go away because it’s a pay as you go system. So all the workers that pay out of their paychecks in July is paid out as benefits to retirees in August. So that will always continue. So, we’ll always have some funds coming in, and those funds coming in will represent 80% of promised benefits being paid out the next month. I always joke, uh, I say whatever I pay in in July goes out to my dad in August. So, just kind of pay as you go. But, if we put the whole story together, and I’m going to kind of speed up through some of these uh, graphics, but this is really showing you graphically what’s happening. So over time, all right, this surplus account has built up and it’s grown grown bigger and bigger, but at some point in time, we needed extra funds up and above the revenues that were coming in. So we started using some of those trust fund accounts. So now current estimates are that in 2035 the trust funds are exhausted. So the gap rate here is showing there’s a shortfall of 20% or 80% of benefits. So now we look at that and say as we go through this presentation we’ll talk about how much social security should be used to replace your income your employment income but too many people rely on social security for a majority of their retirement income across this country. So I truly don’t believe that we can do a 20% across the board cut. It would just hurt too many people to do something like that. So instead, what you’re going to see is as we get closer to 2035, we’re going to see some solutions presented. Now, those solutions could easily be presented today, but these solutions are going to be about more taxes and raising retirement age. So, here is one potential solution. One potential solution in this chart is right now I work at the credit union. So I pay in the social security myself 6.2%. The credit union matches that pays 6.2% for a worker. It would come out to that 12.4% combined. So if one solution here is if that is raised to 3.42, right? We raise that 3.42. So an extra 1.7 to me, an extra 1.7% to the employer. that would really solve the shortfall and that would bridge that gap. But we’re talking about a tax increase. We’re talking about a 2% tax increase. So I think what you’re going to see happen is a combination, right? The payroll taxes may increase a bit. We’re also looking at right now there’s a cap on how much you earn and keep paying into the system. So for this year it’s around $186,000. If you make more than $186,000, you stop paying into Social Security. So that may be raised a bit. They may raise that. They may increase the payroll taxes. They may increase retirement age. So some people are familiar with 66 in a few months. Some are familiar with a full retirement age of 67. You might see a few months added on to 67. You might see something like 67 in two months, 67 in four months and and so on and so forth. But you put it all together, a combination of those things in a smaller increments, it will bridge this gap, and I truly believe this gap will be filled. It’s just not accounted for in 2026. There’s still a little ways to go. So, I think as we get closer, someone is going to run on a platform. Congress is going to adopt some of these changes and uh and correct that shortfall. So, we have conversations with clients. Some clients will come in and be motivated to start their benefits based on what they see in the news and based on those reductions. So, again, nothing is set. I believe the uh the issue will be dealt with, but I wouldn’t make decisions based on a question mark in the future. I believe this will be corrected. So when we look at that, as I said, so many people count on social security for a majority of their income, if not all their retirement income. It would hurt too many people to do that type of reduction, but it was never meant to be your sole source of retirement income. Supposed to work together with other investment accounts, possibly a pension. You have a pension if you’re lucky enough to have one of those. So it’s a piece of the pie. It’s a piece of the puzzle, right? Social Security along with personal savings, investment accounts, retirement accounts, 401ks, IRA. Hopefully, you’ve been joining my presentation on Roth IAS as well, and you have some of those in there. Annuities pay income like pension and social security. Small sliver for some people, maybe inheritance, but when you put it all together, this is kind of where Social Security fits in. Just a piece of the puzzle, not the whole thing. Now we look at uh this is the maximum monthly benefit that social security would pay. This chart is a little bit dated. So maximum monthly benefit at full retirement age in 2026. Maximum benefit is $4,152.
So that would be at full retirement age if you reach that in 2026. This chart is just a few years old. So the numbers are a little bit less. I like to share this chart because number one, it shows you the maximum monthly amount, but number two, it shows you the average monthly amount, how much somebody at each given age receives on average. Everyone’s going to be a little bit different. Everyone’s going to have different work histories, which kind of dictate how much you get in benefits. uh we have situations where in this chart somebody may start their benefits early before full retirement age and they’ll have a reduction in there as well. So basically you look for the most part the program isn’t fully maximized by most people on average there’s about $2,000 for the average benefit. And once we take that, we have the average benefit that’s being paid out and we can help you walk through your numbers specifically to find out where you would be. But then what you do is say, well, based on what it’s going to pay me, based on what my statement shows me, how much should I count on that to replace my pre-retirement income? Now, this is based on earnings, right? So, if you earned $100,000 before you retired, you would look at the benefits that Social Security is potentially going to pay you to replace about 35% of that pre-retirement income. 35% from Social Security. Then you look at, do I have a pension plan? Do I have other sources of fixed income? I’m going to turn to my investment accounts again, the 401ks, the IAS to withdraw in a taxefficient manner to make up the other 65% that social security really doesn’t pay. The more you make, the more income you need, the less of a percent social security is going to replace that. So, if you had lower earnings pre-retirement, if you could live off of lower expenses, going to be a larger majority of your retirement income, higher expenses, higher earnings pre-retirement, it’s going to be a smaller percentage. Just again, a personal situation where you fall within that financial planning chart, how much you need to to live on. I’m going to walk through a timeline here. This is a retirement milestone uh timeline. This incorporates a couple concepts in addition to social security here. So just a couple milestones we want to make sure you’re aware of and taking advantage of. Number one on the lefth hand side is age 50. You want to make sure at 50 you know that you’re available for what they call catch-up contributions. Catchup contributions are retirement plan contributions that are uh increased or enhanced over age 50. So, if you’re doing IRA contributions, you get an extra cont uh catch-up contribution. If you’re doing your 401k contributions, you’re allowed to put in extra money and kind of superersize the retirement savings from age 50. age 55. Uh if you are still working, if you stop working, separate from service, leave your 401k plan at age 55 or later, uh you’ll be able to take penaltyfree withdrawals from that 401k that you left behind, but you have to be 55 when you leave that 401k. So, it’s the rule of 55. everybody else out there, you have to wait till age 59 and a half for penalty-free withdrawals from your retirement plan. Something else happens at age 59 and a half. Back to the 401ks, there’s a uh item in there called the inservice rollover. The inservice rollover really means the IRS is being nice. It recognizes that you may be retiring in a few years. So, it allows you to do a rollover of your 401k before you actually leave work or separate from service. So, you can still have access to the 401k rollovers at 59 and a half. Today’s topic, Social Security starts at age 60 for this conversation. age 60, earliest social security conversation, but it’s only available for surviving benefits. Survivor benefits. Surviving spouse can be started at age 60. Once we get to age 62, we’re going to talk about the first time being eligible for payments if you’re not a surviving spouse. So, age 62, we’ll start benefit eligibility. At age 65, we’ll have those Medicare conversations with you. So, we want to make sure you’re looking at the correct enrollment periods. Age 66 through 67, those are the full retirement age amounts. As I mentioned, 66 in a few months for some people, 67 for more and more people as time goes on. And then age 70, your benefits are going to maximize. You’ll get the maximum deferred credits at age 70. So, if you have not started taking benefits by age 70, you definitely want to do that as quickly as possible. You have to get those started and you must be present to win when you receive those those payments. So, you got to start it. And then at 73, finally, on the retirement milestone, uh required distributions begin for some people born before 1960. Uh required distributions at 75 for those born 1960 and later. So now we set up the conversation. We’ll go back into the benefits. This is the maximum benefit. So at full retirement age in 2026, if you maximize the program, maximum benefit is going to be $4,152.
That’s going to go up a little bit each year with inflation. Simple math. If you take the monthly amount, you times it by 12, that’s going to give you just about $50,000 a year in annual benefits. This is where we take a step back. We put in our I put on my financial planner hat and I say this type of income that’s guaranteed to you. If we look at it in an investment view through an investment lens, you would need to have an investment account of around $1 million where you withdraw funds and say you might take a 5% withdrawal or 4% withdrawal, but you have a million-doll investment account. If you take out 5% to pay yourself income, that’s going to equal the same type of income that we’re talking about with your social security payments. So, I just want to point this out. Treat it as a million-doll investment. Spend time with me. Go through the financial plan. Find out the ideal situation for you, your filing status, go through all the points that I’m going to make today, and spend time on this. You just don’t want to retire on a Monday and start looking at this on Tuesday and start to file your benefits a day later. You really want to treat this again as a million-doll investment. And just take it a step further. That’s for one person, $50,000. A spousal benefit, a simple spousal benefit would get 50% of the other spouse’s benefit. So it would take your total benefit on this slide to $75,000. and it would be like having a million $1.5 million investment account. So that’s why we’re doing this presentation, spending time on it today to make sure you fully understand and know what’s in your best interest to do this. So when we talk about those, right, we’re talking about your benefits, they add up over time. They increase with inflation. The amounts get significant. They last a lifetime. They last spouse’s lifetime. So again, we just want to make sure we’re putting in the work and the time to find out what would be ideal for you. So we’re going to talk here about determining your benefits. Um determining your benefits, obviously it’s based on your earnings. So when you get paid, again, 6.2% out of that paycheck goes into the system. So what we have to do is we have to qualify you for payments. So to qualify for this conversation, you need what’s called 40 credits. So the way you get a credit is every year if you make $1,890,
you get one credit. So if you make $7,560 this year, you would get four credits for the year. 4 * 10 is 40. So to even have this conversation you need a work record of 10 years. Now if you only make 7,560 you’re not maximize them program you won’t have a very large benefit but you’ll be in the conversation. So 10 years to get in the conversation. However what social security does is they take the highest 35 years of earnings. I is 35 years of earnings monthly average. So if you only have 10 years of work history, they’re going to do the calculation. You’ll have 10 years of history. You’ll have 25 zeros in there. So it’s kind of like calculating a grade point average, right? We have a bunch of A’s. We have a bunch of zeros or Fs in there. So if you average all that out, if you only have 10 years, you’re not maximizing the program. your benefits are going to be reduced by all those years you were not working, all those zeros. I might be describing something like a spousal benefit if there’s only a few years of work history in there. Again, we’ll go through spousal benefits, but then a spouse would still qualify for 50% of the working spouse’s benefits. So, I just want to kind of lay it out how it works. 10 years to get in, 35 to really maximize everything. If you find yourself uh confused, if you don’t know what your work history looks like for the last 35 years, well, the good news is you can go and get a copy of your benefit statement. So, years ago, Social Security used to mail this out to everyone every year. It was right around their birthday. This is years and years ago, but I think they took a step back and said, “That’s a lot of paper. That’s a lot of stamps. we’re going to cut those costs and we’re not going to mail statements anymore. So, you don’t get uh paper statements in the mail. You do get a paper statement if you are over age, I believe, 60 and you have not set up for your online account. They will still send that uh paper statement to you. Uh most people what they’ve done is gone to the website, social security website, ssa.gov/myaccount.
What you can do is register for your account so you know it’s secure. You have the password so we cannot have some identity theft or somebody filing for your benefits. So we want to secure the account for you. Uh number two, we want to get a copy of your benefit statement so you can look at it and you can track your past 35 years. You want to take a look at that, make sure it looks somewhat correct. They’re going to increase those numbers for inflation over time. So, it might not look like, hey, I didn’t make $100,000 in 1995. They’ll do some inflation adjustment in there for you as well. One thing I would caution if you take a look at that, if you find something you’d believe to be incorrect, maybe a zero for a year that should not be a zero, you need to find that, you need to report that. And you have a time period to do that. So generally you have 3 years, 3 months and 15 days to get that corrected. So you need to alert social security that there’s a inaccurate reporting of your earnings on there. But uh final reason, right, you want to make sure your earnings are correct. Final reason is for our financial planning services. It’s just a great statement. It’s going to show you your benefit calculation. It’ll show you what your benefits would be at age 62, 63, 64, full retirement age, and then it’ll give you the monthly amount if you go beyond full retirement age. So, those are some of the numbers that we need for that financial planning and helping you make that decision when the right time is to start your benefits. So, now we’re going to talk a little bit uh I mentioned it a few times. Full retirement age, FRA, full retirement age. So, it depends, right? It depends on the year you were born. Full retirement is the age when you could start receiving your full benefits. Again, for most people, 66 and a few months. And if you were born 1960 or later, it’s going to turn into age 70. Very simple calculation. If you take your benefits early before your full retirement age, you’re going to have a reduction in your benefits. If you take your benefits after full retirement age, again, maximum is 70. Maximum what they call delayed credits to 70. Uh you’re going to have an increase. Every year you take it early. There’s going to be reduction every year, which comes out to reduction of 6.25% 25% per year. It’s not an annual calculation. Everyone’s going to be different on what month they start. But if you take it early, the annual reduction is 6.25%. You divide that by 12 for each month you may start early. On the flip side, if you wait till age 70 from full retirement age to age 70, the benefits are guaranteed to go up by 8% per year. And again, you don’t have to wait per year. You just simply take 8% divided by 12 months. Every month you wait beyond full retirement age. It’s going to go up that uh that percentage. So, here’s the chart, right? Uh just finding the year you were born and finding your full retirement age. And again, we’re getting to that point where more and more people uh we’re looking at age 67. So, this is something that may change over time. Again, as the years go on to help solve the shortfall, you may see 67 start to add those two month or four month increments in there. Nothing set yet, but that’s something that uh probably would be looked at. So, another way to look at uh full retirement age, age 67, right? If I am on my benefit statement, if I’m getting $1,000 a month, $12,000 a year, left hand side, if I take it early, right, I go all the way down to age 62, it’s going to be that reduction. 6 and a4% every year. So, simply going from 67 to 62 is going to cost you a 30% reduction for life in your benefits. Now, if you go from 67 to 70, uh, you were full retirement, promised $1,000 per month. We’re going to move it up 8% every year, guarantee that for you, and then it goes to $1,224 or a 24% increase or 8% per year. I don’t think I’m stressing this enough, but there’s also a cost of living adjustment here as well. So, it’s not only the 8% of the guaranteed increase, it’s also the cost of living adjustment. Last year, last year the uh actually for this year uh the cost of living adjustment with inflation, right, it came out to 2.8%. So, you would simply add that on to the 8% guaranteed uh increase in your payment. So, for this year, it would have gone up 10.8%. So, the bigger decision is here. I look at this in a bigger scope, right? We have a reduction from 67 to 62. But if you look at it bigger, right? From 70 down to 62, that’s going to be a 43% reduction. So, if you have the ability, the wherewithal to make it to age 70 versus age 62, that’s going to be a 77% increase over your 62 age 62 amount. $700 increases by 77%. That’s 1,240. Right? So, there’s big decisions, big calculations, things you want to look at and look at and consider. One of the things I mentioned was life expectancy, right? What’s my family history? What do I typically come up with right in my family? Are we octogenarians? Do we have centiggenarians? How long may we live? Because the simple calculation is the longer you live and the longer your life expectancy is, the longer you want to wait, the more it’s going to pay you. If it’s a reverse situation, right? Why do people start early? Now, it’s a personal preference. It’s a personal choice. Some people will say, “I’ve been paying into the system long enough. I want to take money out.” Some people will say, “I’m concerned with what I read in the news and them solving the problem. I want to get some benefits coming to me today based on what today offers.” We did talk about that a little bit uh later earlier. Other reasons, financial issues. Number one, if you need the money to live off of or to make your financial plan work, you’re going to have to start those payments early. There might be other issues, uh, health problems, issues that would cause you to start it early. Single income household, more income coming in will help with social security. children under age 18, school children at home. If you’re eligible for benefits, if you file for your benefits, you can receive benefits for younger children as well, your children. So, all these different things swirl around. Maybe do I start the benefits early? Right? So, it’s kind of personal decision. But what we can do here is when we put together that financial plan, we’re going to look at different scenarios for you. We’re going to look at here’s what it would be if you start now or start early. Here’s a projection at full retirement age. Here’s another projection for you at age 70. So, we can do a compare and contrast. Look how it would go through your financial plan for a tax planning uh strategy. Look at how it would affect withdrawals from your other investment accounts. Maybe if you defer your social security, you’re entering back into my Roth conversion presentation and doing some of those is as far as part of your financial planning. But one of the outputs here from this financial plan is showing the difference between starting early and delaying late. So if you look on the left hand side, you see some gray bars, right? original idea was I was going to start it at 62. Now I’m going to compare that with age 70. So I reduce how much I was going to get paid at 6263. So those gray bars are the reduction. Since we delayed it, the green bars are the extra income coming in by delaying. So what we do is we come up with this break even calculation. Break even calculation give or take. Everyone’s a little bit different, but we’re going to have a break even calculation right around age 80. In this example, it’s 79. Some clients, it’ll be 81. But that’s the point in time where whether you started your benefits early or you started your benefits late, it would have been the same amount of money in your financial plan. It’s just how much longer you live past that point. And then it goes back to that family history, back to the octogenarian sentinarians to see how much longer you should defer taking those payments. So it’s a bit of a calculation tax-wise, longevity wise, and income-wise as well, but something that we could definitely help you put together and look at the the pros and cons of each situation. So now we’re going to go into our next section, which is spousal benefits. Really three things here. uh basic spousal benefits, divorce benefits and uh widow or surviving uh spouse benefits, widow, a widowerower. So the first section is uh spousal benefits. As I mentioned before, it’s a pretty easy calculation. It is uh the calculation of when you go to file for your benefits, they will ask you about your own personal work record. Then they’ll ask you about your marriage. They’ll give you the greater of your own work benefit or 50% of your spouse’s benefit. So there used to be some other more intricate planning techniques that went away years ago, but the spousal benefit really does break down to being as basic as this. So you could have a uh spouse with one work record start early, start receiving their benefits for a number of years. Maybe the higher wage earner continues working, continues to get their deferred credits and build it up. You can then switch from your own record to the spousal b uh record. The only problem with that is if you start your benefits early and just say age 62, right, you have that 24% reduction. That 24% reduction stays with you for life. So if you later switch to a higher amount for your spousal benefit, might be a higher amount, but they’re still going to reduce it by that 24% because you started early. So you have to keep that in mind as well. But that’s the basic spousal benefit. Uh your own benefit or 50% of your spouse’s. So if you want to file for that spousal benefit, your spouse must also file. Filing for spousal benefits early, right? That’ll reduce your benefit. And as we talked about before, the percent of the reduction depends on how early that benefit is taken. You can take it all the way as early as 62, but it’s going to cost you. So, now moving into category number two, uh benefits for divorced for the divorced. So, basically here, marriage has to last 10 years. So, we always joke we we would do these seminars in person before and I would say if anybody’s married 9 years or 9 and a half years, just at this point, you got to stick it out to the 10th year, right? Marriage has to last for 10 years. Divorce has to have has had to last for two years. So you have to be divorced for two years. The other spouse, former spouse is entitled to benefits. Expouse, right? If you’re the divorced spouse in this situation, expouse unmarried. They did not remarry. You’re at least 62 years old and you cannot qualify for a higher benefit on your own record. If you put all that together, you could file for divorced benefits and uh again, you would receive half of the benefit, half the full retirement age benefit reduced if you take it early. So, we had a situation before where one of those in-person meetings, somebody came up to me after the meeting and said, “I will not file for my benefits. I don’t want her to receive anything.” But unfortunately, we had to tell him that you’re over age 70, so you’re missing out on your own benefits and you will never be told or never know if your ex-spouse is receiving benefits off your record. It’s probably something that she’s been doing for quite some time anyhow. So, it it will not affect the uh divorced spouse as the other spouse at all. You just walk through the social security questionnaire. You let them know about the previous marriage and they will do the calculation for you. So key here is marriage lasted for 10 years and divorce lasted for two years. Uh widow widowerower surviving spouse benefit. So this is the one two things change here. Uh number one you could file as early as age 60. So everybody else we said 62. This one goes down to 60, but there’s further reduction all the way down to 60. So, they’ll reduce it even more if you start early. And then you could start the benefit early. You can start at 60 while letting yours continue to grow and acrue and receive all those deferred credits for all those years. So, age 60, right? Let your own benefit grow. Um, this one is a little bit different than the spousal benefit. So, the spousal benefit is really going to max out at full retirement age. So, at full retirement age, the other spouse would get half of that benefit. Surviving spouse benefit, it goes along hand in hand all the way to age 70. So if I defer my benefits, if I wait till 70, I’m going to get a larger and larger amount. My wife, if I pass away, my wife would get my full age 70 amount where she would get less uh under the living right spousal benefit. So widow widowerower just want you to remember could start at 60. you could let your own benefit grow and it could be more than the full retirement age amount if the uh other spouse let it grow. So uh we’re going to talk about somebody who is under full retirement age. So you’re under full retirement age and you are still working. You’re 62 years old, maybe 63. So, you’re still working, but you want to start your benefits under full retirement age. So, this is still working and receiving benefits. There’s just something you need to be aware of called the earnings offset. That simply means that if you make too much money, they’re going to reduce how much they send you in your benefit check each month. Now, for 2026, if you’re under full retirement age, the earnings limit is 24,400. So, if you make less than 24,400, you have a part-time job, a hobby, something you do for fun, this is not going to affect you. If you make more than 24,400, this is going to affect you. So, they’re going to reduce how much they pay you in your benefits, $1 for every $2 in earnings. Easiest way to explain this is if you make 44,000, 24,000 is okay. Nobody has a problem with that. The problem is the extra 20,000. So, the calculation is $1 reduction for every $2 in earnings. Well, you had $20,000 in earnings above the limit. So, they’re going to reduce your benefit payments by $10,000 annually or say $800 a a month. $800 a month. So, it could be a big amount. You just be careful if you’re still working. If you’re under full retirement age, this might be a uh a bad calculation for you. It might significantly reduce how much they pay you. And what they’re going to do eventually, they’re going to pay this back to you once you reach full retirement age. It’s not a lump sum. It’s a bit of a calculation. It’s like a 10-year calculation. So, you will get paid back, but you need to understand under 67, under 66 could be a problem. Now, at some point in time, you’re going to turn full retirement age, uh the year that you turn full retirement age, that earnings limit goes uh that goes up to 65,000. So, just say your birthday’s in July. pre- July, you can make $65,000 for that year. Once you hit July, your full retirement age, nobody does this calculation anymore. So, the year that you turn full retirement age, you can make much more. After full retirement age, no earnings offset. So, that’s the uh the earnings offset and we’re going to go from there. We’re going to talk about taxes. Your taxes on social security. So, social security is a tax, right? I said I look at my pay statement. It comes out. It says FICA tax 6.2%. Every time I get paid, I had to explain that recently to my daughter where her FICA tax money is going. So, you’re taxed on this throughout your earnings years. And that comes up with your benefits calculation. But, uh, what we’re going to talk about here is the second bullet point. When you receive benefits, you’re taxed on it as well. So, it’s going to be taxed to you on both sides. We’re going to talk about the uh the later how much is taxable when you’re receiving benefits. So what they do is they come up with this what they call provisional income. Provisional income is everything and it honestly is everything. So any income from wages, uh investment accounts, interest at the credit unions, dividends, capital gains, anything that looks like an investment, investments to the point of if you have some tax-free municipal bond funds, you put that back in there. That’s considered income. Uh pension plans, anything that’s an exclusion income, all this is included in what they call provisional income. But the key to this is half of your social security benefits. So when you put all this together, all your income and half of your social security, you’re then going to go into this chart. And this chart tells you how much of your benefit is taxable. So top line is married filing jointly. Married filing jointly. If you’re able to keep that number under 32,000, your social security is not taxable. If that number is 32 to 44,000, half of your social security is taxable. And then finally, income of over 44,000, 85% is taxable. So at the maximum, this conversation is 85% taxable. Optimistically, you could look at it and say it’s 15% tax-free income that’s coming to me. But it was taxed to you as a payroll tax. It’s taxed to you as a benefit tax as well. I’ll just kind of take a pause here, mention the new tax bill, the big beautiful bill that came through. There was a lot of talk that social security is not taxable. Social security is absolutely taxable. This is how it’s taxable. What was done in the the tax bill is if you are over age 65, if you don’t make over a certain amount of money, they gave you a larger standard deduction for each person. That larger standard deduction was presented as this makes social security not taxable. Some people don’t qualify for that larger standard deduction. That larger standard deduction is going to go away after 2028, but you need to know. Social Security is absolutely taxable. These are the tax rates that are due on it. So when you look at this, you think, well, what is my provisional income and how do I figure this out and how do I make sure I don’t go into the Social Security torpedo into the next bracket on some of my income? Again, with a financial plan here that I can help you with, one of the things we look at is your tax rates. So we can look at your tax rates left hand side. They might be a bit higher because you’re still working and you’re going through those brackets, the 10%, the 12%. But then we identify a period in time where maybe tax rates are lower. Maybe that uh is an opportunity to stay below that threshold and have your social security benefits not taxable. Maybe it introduces the idea of some advanced tax planning strategies. uh implementing the Roth conversion strategy, implementing distributions from your accounts in a tax efficient manner. So this is something that we put together again identifying those low tax years, identifying the taxation in the future with required distributions and then overlaying social security benefits to find the optimal tax time to do that for you. In this example, right, uh I just put here that there are low tax years again as an example. We could run uh scenarios where we use the lower tax rates to do those Roth conversion strategies. And we could show you at the bottom again tax savings for doing something like that. So, uh from here, right, we’re just talking about filing for benefits. Uh fil filing for benefits. You could do it in person if you live close to an office if that’s convenient for you. Most people these days uh use the online service ssa.gov. Go in there uh make sure you secure your account, you have your passwords, you have your statements, and you go in there with a strategy either in person or online. You need a strategy because you need to elect when you want to start your benefits. So, you want to make sure you do it a few months ahead of time. I think they say it’ll take a month. It usually takes about 3 months or so for them to process and start payments coming through. They’ll ask you a few questions, uh, work history questions, marriage questions, life questions, just to make sure they’re working off the right record and they’re finding you the highest payment that they can get you. You can also schedule a time on the phone if you’d like to talk to somebody in person. One thing I’ll stress is Social Security, they are not financial planners. They’re not going to sit down and hold your hand and say, “Well, if you do this, you’d save a little bit on taxes, but if you wait, it might help your spouse.” They’re going to say, “All right, name, birthday, when do you want to start?” And they’ll help you get it started. Another thing to watch out for is they’ve been doing recently, they will call you to verify some of this information. So, uh, they have made calls and they say, “We notice that you want to start your benefits at this age, say age 70. if you like, we could send you a large check right now, a lump sum to get you going and then we could start your benefits at a lower amount. So, all they’re doing is they’re rewinding time. They’re saying, “Hey, you’re not starting at 70, you’re starting at 69 12.” So, they’re going to add a permanent half-year reduction to you. So, we do the proper planning. You just want to make sure you uh kind of stick with the plan. if you get those lumpsum benefits, just know that that’s all going to be taxable income in those years and then they’re going to apply the age reduction to you. A couple other strategies when you uh look at this, right? If you’re filing for benefits, there’s uh something that’s a voluntary uh suspension. So, if you file for benefits, if you’re in between full retirement age and age 70, you could go back and voluntarily suspend your benefits and you could then start to earn some of those delay credits. You can also withdraw your application. So, it’s kind of called the doover. So, if you started your benefits and you said, “I shouldn’t have done this. I now have a tax surprise. I want to go in a different route.” You do have the do over ability one time and it’s only good for 12 months. So when you file for benefits within that 12-month period, you could withdraw your application. So there is still limited ability to suspend and limited ability to withdraw an application as well. So uh just kind of reviewing again uh the bigger picture, right? Where does social security fit in into the bigger picture? mentioned it’s a piece of the puzzle. We have to look at how everything works together. We have to look at the optimal time not only for life expectancy but for taxation coordinating with other benefits. One thing important that we pull out in a financial plan is something I call a income stability ratio. This is important because this is going to tell us how much of your monthly income is stable, has nothing to do with the market, and how much is variable and could have fluctuations over time. If these markets turn in a different direction, they’ve been great for the last 3 years or so, but if it turns down, we want to have a high income stability ratio for you. Income stability ratio is really a matter or a function of your stable fixed income. Number one, today’s topic, social security. How much will it be? How can I optimize that plan? Same type of conversation with a pension plan. What’s my options? When should I start it? Does it grow in the future? Does it have a cost of living adjustment? How much will it give my spouse? How much will it increase my taxes? And then also we’re talking about fixed income. Some people may have annuity income which again is for life guaranteed income. So we put all this together. We want to look at how much is coming from stable sources. And then we compare that to your expenses. For example, if we go through a expense conversation with you and you spend $2,000 a month, but yet your fixed income is $1,000 a month, your income stability ratio will be 50%. Right? 50% is coming from variable sources. Can’t control what the market’s going to do. 50% is stable. We’d like to see that number higher. We’d like to see you have that 60 to 70% stable income coming in. So we could talk to you again about uh that income stability ratio within the financial plan. Financial plans are designed to answer just a lot of questions for you. So will I have enough? Uh do I have confidence in when my where my income is coming from tax-wise and accountwise? Uh my social security options, right? What are the best opportunities for me? Put this all together, put it in a comprehensive financial plan for you. Get those questions answered. put you on a path to make sure you’re reaching your financial goals. We’re here to help you, right? Not only social security. We could talk about uh income withdrawal strategies. We could talk about when to use retirement account assets versus social security. We could evaluate existing retirement of plans, 401ks, help you walk through the rollover options that are available. As I mentioned, uh, Roth conversion strategies, we can help you out with some of those as well, finding out if that’s a a good strategy, making the most of your, uh, retirement account money. That’s, uh, that’s really what we’re here for you to do at the credit union. What I’m going to do now is, uh, look at some of the questions that came in. I know we had a few. Also launch a poll. credit union likes me to send this out just to get some feedback on our presentations, make sure we’re providing uh good, useful information to you, and again to see if you’d like to either continue the conversation on social security, if you’d like to work on a financial plan, if you have questions in financial planning in general, doesn’t have to be about social security. So, this gives us a way to uh to identify that and respond back to you. And again, if you have any feedback on today’s presentation or future uh topics you’d like to see, you can put that in there as well. This is all my contact information. I always say call, click, or visit, right? We could talk over the phone. If you use this QR scanner, it’s going to take you to my calendar. Uh you’ll be able to choose a convenient time. It sets up a Zoom meeting like this. We could talk through some of these concepts. If you are in the Chicagoland area, I’m in the credit union headquarters every day as well. So, you’re welcome to come in for investment account meetings, do some financial planning, and uh we can meet in person face to face. So, with that said, I appreciate everyone’s time. Again, please, if you have a chance, fill out that poll, make sure we can get back to you with uh with what you need. I’m going to go through, we got some questions coming in on the uh chat. First one I’m going to look at as the chat, then go over to Q&A. So, you want to catch me real time, uh go into the uh the chat feature here. So, uh question came through. I’m just going with the most recent. Somebody asked, uh, how to schedule a time with you to create or review a financial plan. Um, again, information is on the screen. A little phone. Take a picture of that. Not take a picture, but tap on the camera. It’ll take you to my calendar. The credit union is going to send you a email on my behalf. When this is over, you’ll have all my contact information. You’ll have a link to my calendar. Choose a convenient time. But uh you you mentioned in your question uh review a financial plan. It’s a great question. Um if you have a financial plan, if you have investments, think of this, right? We go to a doctor, we’ll not hesitate. I want a second opinion, right? I I it’s my health. It’s important to me. Same thing with financial planning. We’re here for you. We can give you a second uh opinion. We could do a complete analysis on an existing financial plan or a account statement. look at your holdings. We’ll do a risk profile. We’ll do a cost analysis. See what they’re charging. See if we can reduce those fees. Do some stress testing on it. Really see how it implements with your comprehensive plan as well. So, great question there on on a review. We absolutely do that. Uh, somebody asked the question, uh, does this change if you are self-employed? And I did see this question come through. So, this question was regarding the 6.2% 2% tax I pay and this 6.2% that the credit union pays into the social security administration rate. So it does change if you’re self-employed. If you’re self-employed, your employer is not putting in that 6.2. So if you’re self-employed, you’re seeing that 12.4% come out when you do your taxes. So you’re paying that that full amount yourself. So that’s kind of the difference for the self-employed. Another question came in. Uh, good one. What’s the difference? 30. I think you took a look at my calendar, but what’s the difference between a 30% u 30% 30 minute meeting and a 60 minute meeting or appointment? Um, what we might want to do with the 30 minute is get to know you a little bit, go through your situation, if you have specific questions you want answered, tell you a little bit about my background, walk you through our our services here and see if we’re a good fit or we can get some information answered for you. 60-minute appointment, that would be a little deeper, right? We want to start to get involved in financial planning for you. look at some of those statements, start to compile that information. I say the initial meeting um just again introductory understanding your situation. 30 minute would be great helps me understand what you’re trying to accomplish and then I can help you organize that information for the second for the 60 minute appointment. Again, another question came in. What materials to have ready for the appointment? Um, that’s something that uh we kind of talk through, but I have an email that I could send you that uh bullet points what we would talk about in a financial planning meeting. It also bullet points what information to have available, too. So, we could uh send that out to you once you schedule that meeting as well. So, all good questions there. I think I cleaned out the uh chat feature. I’m just going to take a look at the uh Q&A here. Uh there is a question. Is social security still taxed if it is invested? I don’t know that I understand the question or I could be able to uh answer that. So, we might have to take that offline to go a little bit deeper. Not sure uh if it is invested really. Currently, the way it stands, there’s no investment options with social security. There was talk about some privatization, maybe having an investment component to it, but yeah, everything we talked about so far, right? It’s a tax coming out of your payroll, out of your check, and then once it’s uh paid to you, it’s going to be taxed maybe to a certain level. So, yeah, I’m happy to uh elaborate on that, maybe go through your personal situation, see if I could pull out a little bit more to get you a better answer there. We have a question. Uh what is the cost for financial planning like to say right you’re a member of the credit union credit union is defined by members helping members so we do not plan we do not charge sorry we do not charge for our financial planning something that helps me understand your situation better helps make any recommendations to you either with this social security conversation maybe an investment uh recommendation so something that uh again we do not charge charge for if we do have any recommendations for you on the investment side that may change right some investments do have a fee some investments don’t have a fee will completely disclose that to you so no charge on the financial planning front uh somebody wrote if I did not quite get all the information will you I believe will this air again um we don’t do not record the presentation we kind go through every once in a while. So, you may see this pop up again as a topic. But, uh, I would say, you know, today’s really about introductions. Just want to introduce myself as a certified financial planner at the credit union. So, what we can do here, we have an introduction, you know, uh, that we can help you with these conversations. I would recommend scheduling a time. We could talk through your specific situation, your social security questions, and, uh, and get those answered. Uh, another question that came in here. Sorry, I’m going a little bit long, but uh if somebody just got married for the first time in February, if something happens to us at the age of 62, I wouldn’t be eligible for spousal benefit since we were never married for the 10 years in your example. So the 10 years, right? So you just got married. So the 10 years is going to be for the um divorced benefits. uh if something so I believe in your uh question you’re actually questioning the surviving spouse benefits the widow widowerower benefits so I believe I’ll have to double check but that is I believe it’s like 2 years a year two years on these surviving spouse benefits so under your question your example um yeah I believe everything should be fine we can go a little bit deeper in your your example but we just don’t want to confuse uh divorce benefits 10 years with surviving having spouse benefits. You just need to be married a couple years. And here we go. We got one other, right? If you are divorced and looking for your spouse’s social security as an option, was married uh 28 years. What paperwork should I take in the Social Security office to get insight into this benefit so you can make sure you get your benefits. Yeah. They’re going to walk you through. They’ll ask you sequentially when were you married? How long did it last? When did you divorce? So any backup information that you take with you to that office if you have marriage certificate if you have divorce decree uh current identification all that is really going to expedite the whole process for you but I would really concentrate on marriage license divorce decree if you do have that uh inperson meeting with them. Uh does the financial planning last one here does the financial planning include members spouse? Absolutely. you’re a member of the credit union, that’s your spouse is 100% included in your financial plan, especially when we do those taxes. So, yes, please, we want to make sure we get it right for the tax aspect. So, uh, make sure you do set that up. I notice somebody wrote in there, I’m having a hard time setting up a meeting. If for whatever reason, if you can’t get that QR code working correctly, again, there’s going to be an email coming out from the credit union. It’s going to have uh all my information is gonna have a link to my calendar as well, so it might be easier for for you to use. With all that said, uh appreciate you joining me this afternoon. Thank you for the great questions. Sorry again, we went a little bit longer than an hour, but you had some really good questions today. Look out for the email uh from us. Uh look out for uh future events that we have and uh hopefully we can help you along your financial journey. Have a great afternoon again and thanks for joining me. Take care.